SRP approves rate reduction

Salt River Project will be lowering its rates by 1.1 percent starting in May, the result of higher revenues and better sales than expected.

The SRP board approved the price decrease and will put it into place before the summer, when rates and use typically rise.

SRP had about $20.5 million in lower-than-expected costs for its 2013 fiscal year, which ends April 30. Most of the price decrease comes from higher use and sales from its customers, said Aidan McSheffrey, associate general manager and chief financial executive for the utility.

It also was able to sell off some of its renewable energy from its geothermal operations because it was ahead of its goals to get 20 percent of its power from renewable sources by 2020, McSheffrey said.

“I’d rather be ahead of the game than behind the game,” he said of SRP’s renewable strategy.

Those moves accounted for about 0.8 percent of the rate decrease. The remaining 0.3 percent was accomplished through lower costs associated with SRP’s fuels, namely natural gas, McSheffrey said.

“The prices have seemed to bottomed out and come back, but they are below where we have historically thought they would be,” he said.

Much of that has to do with increased natural gas drilling around the U.S. Utilities around the country have seen their natural gas costs drop, but many are expecting them to bounce higher again. McSheffrey said while they expect those prices to increase, it likely will be on a much flatter curve than in years’ past.